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September 2008 Archives

Around the web, September 30

  • Gigantic wave of investor litigation presumably on the way, but it's not easy to predict the degree of success it will have [NLJ]
  • Connecticut's state version of the EEOC, the Commission on Human Rights and Opportunities, assailed as "hopelessly inept" and unable to follow own rules [Karen Lee Torre @ CLT; Daniel Schwartz]
  • Wanna bring plaintiffs from around the country to sue drugmaker Sanofi-Aventis in Illinois's cozy St. Clair County over antibiotic Ketek? Sure, c'mon down, judge says [Madison County Record, more]
  • State of New Jersey -- controversially represented by outside contingency-fee counsel Alan Kanner of Kanner & Whiteley of New Orleans and Bruce Nagel of Nagel Rice in Roseland, N.J. -- clears key hurdle in litigation demanding that ExxonMobil fork over huge sums for past pollution [NJLJ]
  • Why have those asbestos-in-cigarette-filters lawsuits faded from the news? Because Lorillard has been racking up defense verdicts [AmLaw Daily]
  • NYT's Adam Liptak may turn his much-noted "American Exception" series on law into a book [Obbie/LawBeat]

U.S. to U.K.: Enforce Your Own Bad Laws

The NYT today rightly lauds the passage of a bill in the House of Representatives that would prevent parties who have obtained judgments in libel suits in some foreign courts from enforcing them in U.S. courts. The legislation is intended to discourage the practice of "libel tourism," which refers to the strategic decision of a libel plaintiff to file suit in a venue overseas where substantive protections for free speech are less comprehensive than those that Americans enjoy at home. Britain's notoriously pro-plaintiff libel law makes it a world-wide destination for such claims.

Daubert (& Frye) 15 years later

Fifteen years after the U.S. Supreme Court's landmark ruling on science and expert testimony in the courtroom, state courts are still sharply divided in their approach, with some following the federal Daubert rule, others the older Frye rule, and yet others embracing alterations or exceptions to one or the other. In a WLF Legal Backgrounder paper (PDF) last month, Martin Calhoun of Spriggs & Hollingsworth lays out the current pattern of Daubert-adoption and concludes that "too many juries in too many states still render verdicts based on expert testimony that is not supported by sound science and would not satisfy Daubert's exacting standards of reliability."

Mortgage cramdowns, cont'd

Regarding Carter's post: David Frum raises a question to which I don't have a very confident answer, namely, is there some substantial public policy reason why creditors who lent on a security of real estate should be protected from cramdown in bankruptcy, while creditors who lent on other security are fully exposed to it?

It also hasn't been explained to me exactly how the now-dropped mortgage cramdown provisions were thought to represent a "bonanza for trial lawyers," as House Republicans contend (though such provisions may well be suspect on other grounds, e.g. because they would retroactively change a set of rules on which lenders had relied). Debtors who would have declared bankruptcy anyway, of course, already have hired lawyers, and it might seem the effect of a cramdown would be not so much to augment those lawyers' fees as to leave more in the estate with which to pay other creditors, such as credit card companies. I suppose the premise must be that lawyers will convince more persons who could have avoided bankruptcy to throw themselves into it so as to avail themselves of the mortgage cramdowns. Maybe that's the theory -- and I welcome explanations from those more knowledgeable than I -- but it still seems to me a stronger argument against the Durbin proposal was that retroactive alterations in lender priority should be avoided as far as possible.

More: Ted tells me the story is more complicated than this, and says he'll try to write something up explaining the issue in wider perspective.

New York Sun

If the right-of-center Gotham newspaper fails to survive its financial struggle, New Yorkers (and the nation) will lose an outstanding source of legal affairs coverage and a respected editorial voice on issues of legal reform. Some of our many links to both can be found here, here, and here. Update: Yes, it's good-bye.

"Bearing down on short sellers"

Todd Sullivan reprints a 1932 article from Collier's magazine that shows how little things have changed. More: Mark Hulbert, NY Times.

Around the web, September 29

  • Erin Brockovich enlists as pitchwoman for NYC tort firm Weitz & Luxenberg, of Sheldon Silver and asbestos fame, but there's no telling when her reputation will catch up with her [NY Post, NY Daily News]
  • Whoever thought "liar loans" would end badly? Quite a shocker that was [Malanga, Real Clear Politics]
  • Class-action suit seeks end to Building Industry Association of Washington support for Dino Rossi, challenger to Gov. Christine Gregoire (D-Wash.) [WSJ editorial]
  • Chemerinsky: new Irvine law school "has no ideology" [L.A. Times]
  • Don't blame "mark-to-market" accounting for the catastrophe, argues Nicole Gelinas [City Journal]
  • Court of appeals appointments by next president likely to make big impact [Legal Times]

Working for the cramdown

Gone from the final financial stability legislation is what's known as the "cramdown," one of the provisions of the Democratic counterproposal to Treasury Secretary Paulson's financial rescue plan would have allowed bankruptcy judges to revise mortgages terms for principal residences. In a blast e-mail Friday, House Republicans decried the language:

TRIAL LAWYERS - Instead of investigating the scandal-plagued American trial lawyer industry, the Democratic Congress has showered it in pork, tucking special benefits into major bills to benefit the industry at the expense of American taxpayers - and the economic rescue bill has been no exception. Working drafts of the bill include so-called "cramdown" provisions allowing bankruptcy judges to reduce mortgage principals under the guise of helping those at risk of foreclosure. If enacted into law, the provision would be a bonanza for trial lawyers and undercut the effectiveness of any economic recovery effort by making it even harder to value mortgage-backed securities.

Senate Democratic Whip Richard Durbin (D-IL) had pushed for cramdown language earlier in the year as part of the original housing bailout bill. (See this Washington Post story and this L.A. Times article.)

The Mortgage Bankers Association of America was the leading opponent of the provision, sending a letter to Capitol Hill last week outlining its objections. Other major financial groups were also fiercely opposed. The Wall Street Journal law blog has more on recent related developments.

The House Financial Services Committee has posted the legislation and other materials relating to the Emergency Economic Stabilization Act of 2008 at the committee website, here.

Boston Globe on Station nightclub fire

The quest for peripherally involved deep pockets to mulct came off very successfully, which some of those quoted in the piece view as disturbing and others, sadly, as almost something to celebrate. We've covered the case extensively over at my other site, Overlawyered.

Sen. Clinton on mortgage relief

Altering the bailout to add homeowner relief quite likely will deepen the hole of the holders of mortgage debt whose situation occasioned the bailout in the first place. Hans Bader:

Senator Hillary Clinton wants the taxpayers, and risk-averse people who took out fixed-rate mortgages, to subsidize people who took out adjustable-rate mortgages. In today's Wall Street Journal, she says that people with adjustable rate mortgages should be able to keep their introductory low interest rate forever, even though no one would ever have offered them a permanent rate that low, and even though the introductory adjustable rate is lower than the rate they would have received on a fixed-rate mortgage. (When I bought a home, I had the option of either a fixed 5-percent mortgage, or an adjustable-rate mortgage with an introductory rate of 1 percent that probably would have risen to 7 percent or more by now. I took the fixed 5 percent rate).

Clinton also advocates a temporary moratorium on foreclosures....

ADA Amendments Act of 2008, cont'd

Daniel Schwartz: "What employers should know" about the new enactment (earlier). More: Tennessee lawprof Alex Long (h/t Carter W.)

The deadline for filing campaign financial disclosure reports just passed in Michigan, and the reports confirm the suspected: Despite claims to the contrary, the Reform Michigan Government Now! initiative campaign was almost a purely partisan Democratic affair. As The Detroit Free Press reports, the Michigan Democratic Party spent nearly $1.5 million to support the group, trying to put a proposed constitutional amendment on the ballot to restructure the three branches of government. In the process, eight Republican judges from the Court of Appeals and the Supreme Court would have lost their seats.

Business groups certainly contributed to the opposition, but then, they never pretended to be disinterested parties. (AP story.)

As an inadvertently posted a campaign document revealed, the proposal was an attempt to gain control of state government in time for the next legislative redistricting following the 2010 Census. The Court of Appeals and then the state Supreme Court kept the measure off the ballot because it represented a major revision of the constitution, requiring a constitutional convention.

Earlier Point of Law posts here. The Reform Michigan Government Now!'s financial disclosure is available from the Secretary of State's office here.

Around the web, September 25

  • For next New York chief judge, Judith Kaye's shoes will be hard to fill [Albany Times-Union via Bashman]
  • Flawed article asserting contributor influence on Louisiana Supreme Court mushrooms into huge embarrassment for Tulane Law Review [Eugene Volokh, Obbie/LawBeat]
  • Local Chamber president predicts that if asbestos-suit influx continues, "Delaware incorporation will soon come to be viewed as a liability and not an asset." [(Chamber-backed) Madison St. Clair Record]
  • Extraterritoriality in one city: Bloomberg claims victory as final settlement wraps up NYC's legal campaign to bully and arm-twist out-of-state gun dealers [NYLJ]
  • Extraterritoriality in one country: Potential diplomatic strains with Beijing over private lawsuit in L.A. claiming that Bank of China allowed money transfers by Mideast terror groups [American Lawyer, Economic Observer Online, China Daily, Times of India]
  • Yet more costs of extraterritoriality: to further San Francisco suit against Chevron over claimed human rights breaches in Nigeria, plaintiffs want visas granted to Nigerian witnesses whom State Department deems an overstay risk [NLJ; more background on extraterritoriality and Alien Tort Statute here]

The Financial Accounting Standards Board has announced a delay and another round of reviews for its proposal, Disclosure of Certain Loss Contingencies-an amendment of FASB Statements No. 5 and 141(R)," responding to an outpouring of criticism from businesses, the legal profession, and trade associations. A statement following yesterday's board meeting:

The Board decided on a plan for redeliberations of its Exposure Draft, Disclosure of Certain Loss Contingencies. The Board directed the staff to prepare an alternative model that attempts to address the concerns that certain constituents raised about the Exposure Draft. This alternative model will be field tested along with the model in the Exposure Draft. The staff expects that field testing will take place during November and December 2008, and roundtable meetings will occur in either early January or March 2009. Board redeliberations are expected to begin in late March or April 2009. The Board also decided that any final Statement on this topic will be effective no sooner than for fiscal years ending after December 15, 2009.

In demanding more detailed reporting of the the potential losses resulting from litigation, FASB was going to force companies to show their legal hand to the very people suing them, violate attorney-client privilege, and in the process, require highly speculative commentary that could damage a company's reputation with investors. As the WSJ Law Blog wrote in August, imagine being Merck in past years and trying to report the costs that the Vioxx litigation would impose.

The only groups supporting the proposal -- in fact arguing that it didn't go far enough -- were "socially aware" investors and organized labor, presumably because it would allow them to substitute their priorities for the corporations' current profit motive. So FASB's decision should also be seen as a rebuff to the trial lawyers and class-action crowd who make their living from suing businesses.

FASB undoubtedly has more pressing issues to deal with at the moment, in any case.


Back in May we reported on work (PDF) by Martin Grace (Georgia State) and Tyler Leverty (University of Iowa) finding a positive association between legislative limits on liability and lower insurance rates -- seemingly an obvious if not redundant finding, but one that some advocates have resisted with strange pertinacity. Grace and Leverty also offer particular attention to a point often overlooked, which is that the full rate-lowering benefits are unlikely to emerge until it becomes clear that a given round of reforms will survive scrutiny by often-unsympathetic judges. Now the paper is getting another round of publicity: Iowa Press-Citizen, Legal NewsLine, and TortsProf.

Which is more unsettling, the grammatical slip or the substance? ABC's Jake Tapper reports:

"I think we're going to be up very late counting votes," Sen. Joe Biden, D-Del., told a kettle of lawyers Tuesday night at a fundraiser for the Democratic Victory Fund hosted by the American Association of Justice in Washington, D.C. "And so, your help means a big deal. The last help we need you for, is you're the best legal minds in the country. We're going to need you going into election time, because we're going to mobilize thousands of lawyers to make sure they don't steal another election." ...

Biden said that he's "done more than any other senator combined" for trial lawyers.

"There are two people -- you've heard me say it before -- two groups that stand between us and the barbarians at the gate," Biden said. "It's you and organized labor. That's it. That is it. So, mark my words, mark my words, if we lose this election, you are going to continue to see a continuation of the onslaught on everything we care about. For real. For real. So, I'm not only thanking you for your help. I would think you're all absolutely brain-dead if you didn't help. And I mean it."

More: Jennifer Rubin, Commentary.

We already know about the speech that Montana's governor, Brian Schweitzer, delivered to the American Association for Justice last July in Philadelphia. (See this post.) Schweitzer entertained the approving audience with tales of voter fraud and intimidation on the Indian reservations and his efforts to rig the vote for Democrat Jon Tester in the 2006 U.S. Senate election.

First a topic at a gubernatorial debate, the trip has now become even more prominent as a campaign issue. From the Missoulian:

HELENA - Gov. Brian Schweitzer should reimburse Montana taxpayers for a July trip to Philadelphia, where he gave his controversial speech suggesting he tampered with the 2006 election, Republican gubernatorial candidate Roy Brown said Tuesday.

"It's incredibly disappointing that the governor thinks Montana taxpayers should pick up the tab while he travels the country to shatter the public's faith in our electoral process," Brown said. "As he jet-setted to Philadelphia to boast about rigging our election, Montanans were on the hook for over $1,300 while the governor stayed at the Ritz-Carlton."

The $1,300 was part of a $2,200 bill for the entire trip, according to the legislative auditor's office.

We'll not feign outrage at governors mixing politics with business on out-of-state trips. The trial lawyers' annual confab coincided with the National Governors Association centennial celebration and summer meeting. Speaking from personal experience, many governors traditionally schedule fundraisers and political meetings around NGA gatherings (especially the winter meeting here in D.C.).

But have you listened to Schweitzer's speech? It's pure political rock 'n roll, with a shout out to Al Franken, an homage to Paul Wellstone, blasts against Sen. Norm Coleman and, of course, lots of solicitiousness toward the trial lawyers. (Twinned with solicitations for campaign contributions, too, we assume.) Add in the bumptiousness and mocking of Montana's hickness, it's just the kind of remarks that taxpayers should not have to pay a penny for.

In any case, how nice to see trial lawyers emerging as a campaign issue.

Addendum: We asked in our last post who introduced Schweitzer at the AAJ event. Only one e-mailer wrote to say it was definitely Les Weisbrod, president of the AAJ, and a Dallas lawyer. Given the substance of the remarks and the Texas accent, we'd say that's right.

Legal risks of four-day work week

Employees seeking to harmonize their work life with family or personal commitments often ask to work a four-day week, offering to put in a longer day while on duty. But the law gives employers reasons to hesitate or refuse, entirely aside from the business considerations. Notes Molly DiBianca at the Delaware Employment Law Blog (via @lilyhill), "such a switch may trigger obligations under the ADA, FMLA, NLRA, and other significant employment laws". A PDF of the full paper is here.

New NYTimes blog "Economix"

Among its first entries, Harvard economist Edward Glaeser, who will be a regular contributor, weighs in on housing prices.

Congress's FACTA patch

Following an outcry from the business community, lawmakers on Capitol Hill claim to have fixed the notorious "gotcha" statute on credit card receipt privacy, which entrepreneurial plaintiffs had used to gin up gigantic class actions with no proof of actual harm. But as Randy Maniloff points out in a WLF paper (PDF), the fix actually leaves retailers, especially the unsophisticated mom-and-pops, wide open to another wave of opportunistic suits down the road.

Around the web, September 24

The Senate Judiciary Committee today held a hearing, "Barriers to Justice: Examining Equal Pay for Equal Work," featuring testimony from Lilly Ledbetter, whose wage discrimination suit against Goodyear Rubber and Tire made it all the way to the Supreme Court in 2007. (Ledbetter v. Goodyear opinion here.) As we've noted previously, she has become an active supporter of Barack Obama's presidential campaign -- featured in anti-McCain ads -- and a symbol of grievance for labor and women's groups.

Eric Dreiband of Jones Day was originally scheduled to testify, but it appears that the business community was instead represented by Lawrence Lorber of Proskauer Rose. In his testimony, Lorber addresses H.R. 1338, the Paycheck Fairness Act, recent employment law cases before the Supreme Court, and the harm that class-action lawsuits cause in employment law. The final point: "The Class Action Is Neither An Appropriate Nor An Effective Mechanism For The Resolution of Statutor Employment Discrimination Claims." His conclusion:

[While] while the class action is intended to provide an effective and efficient mechanism to resolve legal claims held by numerous litigants, the mechanism has devolved into a moneymaking tool (albeit a very effective money-making tool) for plaintiff's attorneys. The settlement of large nation-wide class actions often results in attorney fee awards in the tens or hundreds of millions of dollars, while providing little relief to the class members. Used in this manner, the class action fails to provide justice for victims of discrimination. Instead, it makes a mockery of the equal employment opportunity laws. Congress should put a stop to this by enacting legislation to clarify the standards that govern employment discrimination class actions.

And the prepared statements...

Lilly Ledbetter
Lawrence Z. Lorber
Cyrus Mehri
The Honorable Diane Feinstein
The Honorable Patrick Leahy
The Honorable Russ Feingold

Credit crisis: the second-wave litigation

Kevin LaCroix at D&O Diary has been tracking some of the burgeoning litigation to arise from the subprime catastrophe (Word-format document here), and finds that along with lawsuits against some predictable targets (Merrill Lynch, AIG), the "dark new phase" of the crisis "already has produced its own distinctive round of lawsuits", in which "companies lacking any direct exposure to subprime nevertheless experience losses because of exposure to other companies suffering credit crisis-related reversals." (Example: Constellation Energy). LaCroix believes "the ensuing litigation wave could threaten to become a generalized inundation deluging a substantial number of participants in the larger economy."

New York Surrogate's Court

Henry Stern of NY Civic provides a historical primer on a perennially under-scrutinized element of the Gotham legal scene, whose rich patronage benefits have traditionally come at the expense of widows and orphans of New Yorkers imprudent enough to die without a will.

Around the web, September 23

  • New frontiers of institutional reform litigation: Florida suit claims it's an Olmstead violation for government not to support home or small-facility care for patients now in nursing homes [AP]
  • Last of the dinosaurs? Missouri hospitals' suit is among the few remaining hot spots of mostly-discredited tobacco recoupment litigation [Overlawyered]
  • Court rules taxpayers of Waterbury, Connecticut are not liable for predatory sex practices of its former mayor [Second Circuit Civil Rights]
  • Texas lawyer challenges as unconstitutional that state's law restraining plaintiffs from suing over silica if they suffer no impairment [Texas Lawyer]
  • And what a shock that is: study by law firm specializing in Community Reinvestment Act-related litigation purports to exonerate CRA from blame in subprime calamity [The Other McCain]
  • More on New Zealand no-fault, this time in the medical care context [Running a Hospital via KevinMD]

Going after lawyers in mortgage mess?

Anthony Lin at the New York Law Journal recalls the most obvious precedent:

Talk of modeling a new government office to dispose of those securities on the RTC [Resolution Trust Corporation] likely sent a shiver down many lawyers' spines last week. The RTC, along with the Office of Thrift Supervision (OTS) and Federal Deposit Insurance Corporation (FDIC), still inspire a special dread within the legal profession for the way they went after law firms in the early 1990s. Charged with recouping as much as possible of the $124 billion taxpayers paid for the S&L bailout, the agencies aggressively sued those whose negligence allegedly contributed to the S&L failures, with law firms near the top of the list.

Law firms that had represented thrifts, including Jones Day, Kaye Scholer and Paul, Weiss, Rifkind, Wharton & Garrison, paid millions to settle claims brought by thrift regulators. In the case of Kaye Scholer, the 1992 decision to pay $41 million came after the OTS controversially moved to freeze the law firm's assets, a potentially crippling blow.

Origins of mortgage meltdown

Business historian John Steele Gordon, guestposting at Freakonomics, has some thoughts on the distinction between a financial crisis and an economic crisis, the danger signs with Fannie and Freddie, and the prescience of the WSJ editorial board.

One last Ledbetter appearance in Congress

It does not appear the Senate will have another vote on the "fair pay" legislation, i.e., H.R. 2831, the Ledbetter Fair Pay Act, which passed the House but failed to gain cloture last April in the Senate. However, Lilly Ledbetter does get one more moment in the congressional grievance spotlight this week, testifying at a Senate Judiciary Committee Hearing Tuesday, "Barriers to Justice: Examining Equal Pay for Equal Work."

Ever since the Supreme Court rejected her arguments in Ledbetter v. Goodyear Tire and Rubber, she's become a cause celebre, the embodiment of wage discrimination for the Democrats. Ms. Ledbetter had a prime speaking slot at the Democratic National Convention and campaigned last week with Michelle Obama in Richmond. In a trenchant post, "Lilly Ledbetter, Living a Lie," D.C. attorney and Powerline blogger Paul Mirengoff is having none of it, challenging the veracity of her arguments and reiterating the importance of statutes of limitation.

Prevented by the facts from arguing in a real court that she didn't have enough knowledge about her pay situation to bring a timely EEOC charge, Ledbetter (and those who seek political advantage through her) now raise this false claim in the court of public opinion. For example, Ledbetter claims that "the only way that I really knew [about the pay discrimination] was that someone left an anonymous note in my mailbox showing my pay and the pay for the three males who were doing the same job, just on different shifts." According to Ledbetter, "when I saw that note, it just floored me. I was so shocked at the amount of difference in our pay for doing the same exact job. And I went immediately to EEOC."

This claim, of course, cannot be reconciled with her sworn testimony that three years before allegedly receiving the "anonymous note," she told her supervisor that she definitely knew that she was making thousands less than her male counterparts for the same work.

Also testifying at Tuesday's hearing are employment law experts Eric S. Dreiband of Jones Day and Cyrus Mehri of Mehri & Skalet. Dreiband, the former EEOC's general counsel, moved from Akin Gump to Jones Day this July. And Mehri was featured in last week's "Ad Age" in a story headlined, "Top Lawyer Preps March on Mad Ave -- Man Who Beat Coke and NFL Starts to Study Diversity in Ad Agencies."

Mr. Mehri declined to discuss whether a lawsuit was in the works but said his firm was behind the preliminary results of a study obtained by Ad Age. Any way you look at it, the fact that a top civil-rights attorney has commissioned a survey of diversity in ad agencies does not bode well for the agencies whose ranks are still overwhelmingly white.

Can't wait for the congressional hearings.

Hail of dead cats for mortgage bailout plan

Felix Salmon raises questions about the plan to "give Hank Paulson $700 billion, let him buy up mortgage-related toxic waste, and thereby rescue the banks and save the global financial system" and string-cites a sampling of hostile blogosphere reaction (more); Yves Smith at Naked Capitalism rounds up more hostile reaction (also note this great roundup typo, "Robert Knutter" -- the "K" is presumably silent); Volokh conspirators assail it here, here, and here; Becker (with reply from Posner); Michelle Malkin; NYT Opinionator; Calculated Risk at least thinks the problems might be fixable.

ADR's supposed "corrupting" role

In Judicature, Harvard lawprof Peter Murray pens a jeremiad against arbitration, mediation, and private alternative dispute resolution generally which draws tart rejoinders from ADR practitioners Victoria Pynchon (more) and Geoff Sharp (via Blawg Review #178).

Around the web, September 22

  • Get ready for massive step-up of capital market regulations [Ribstein]
  • Charles Sykes on ideological warfare at Wisconsin Supreme Court [WPRI via Pero, earlier]
  • Midwife serving Amish community charges $1,000/birth, must not get sued much [KevinMD]
  • If the judge is accepting money from both sides, that means he's free to decide the case honestly, right? [Somin @ Volokh, earlier here and here]
  • Stop the pixels: in Marshall, Texas, famed plaintiff's magnet jurisdiction, jury returns a defense verdict [WSJ law blog]
  • Texas med-mal reform, five years later [El Paso Times]

Raw data and expert studies

Laura Ellsworth, Chuck Moellenberg, and Neelie Simmons of Jones Day argue the case for access to the raw data of opponents' studies in a subscriber-only ABA Expert Report article summarized by Jane Genova at Law and More.

Lawsuit-proofing the Bailout?

It looks like they're going to try, anyway. The draft plan, created by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke and submitted to Congress today by the White House, contains the following language designed to protect Treasury's judgment calls from legal challenge:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

That seems like a lot of independence for a program budgeted at $700 billion, but I agree that getting trial lawyers involved could do more harm than allowing Congress to keep an active hand in.

Point of Law on Twitter

If you use social networking service Twitter you can now get regular notifications of new Point of Law posts soon after they're made. Just "follow" @pointoflaw. While you're at it you might also want to follow site editor @walterolson (that's me) and my other law-related site @overlawyered. (Thanks Twitterfeeds, called to my attention by Laurie at Halo Secretarial).

Temporary ban on short-selling

So many reasons to think it won't work, and might make things worse (more).

In New Hampshire, Merrimack Superior Court Judge Philip Mangones has kept alive the state's suit against oil companies that produced the gas additive MTBE, but he has followed the Rhode Island Supreme Court in rejecting the state's public nuisance claim.

From the Concord Monitor, "State right to sue oil companies jointly":

In the state's biggest-ever environmental case, the attorney general's office is suing producers of MTBE and gasoline containing the additive, saying they should foot the bill for cleaning the thousands of wells and drinking water supplies across the state into which the chemical has seeped, in some cases making the water undrinkable.

The case names 26 defendants - companies such as Exxon Mobil, Irving, Citgo, BP and Hess - some of whom filed motions to dismiss four of the seven counts against them. Mangones denied their requests on three counts but dismissed one about public nuisance.

Citing a Rhode Island lead paint case, Mangones said public nuisance does not apply because the manufacturers were not in control of the product at the time it allegedly caused harm.

The story notes that D.C. attorney Rick Wallace, representing Shell and Chevron, is heartened by the dismissal because, "The state relied principally on this claim for its contention that it can demand payment for what it calls 'the cumulative effect' of MTBE 'statewide' without having to prove that it incurred damages from particular causes at specific sites." The other claims will require proof that a company contributed to a specific incident of contamination.

The original suit was filed in 2003 by Attorney General Peter Heed with the support of Gov. Craig Benson (both Republicans), and current AG Kelly Ayotte announced in January she would continue the suit. (Ayotte succeeded Heed after he resigned in 2004 over allegations of improper touching.)

Links and MTBE-related history below ...

ADA Amendment Act of 2008

By overwhelming margins, with the business community going along, Congress has passed a bill reversing several Supreme Court decisions so as to widen the number of potential litigants covered by the Americans with Disabilities Act. The passage of the bill this year may reflect a certain tactical calculation on both sides: business defendants may fear a more intransigently liberal Congress next year, while disabled-lobby proponents may prefer dealing with George W. Bush than with a successor after January, since the current White House incumbent, like his father, appears more than eager to sign measures billed as advancing disabled rights. Veteran Washington lawyer Lawrence Lorber of Proskauer, who represented the U.S. Chamber of Commerce, is emphasizing that the bill is not as radical as early versions, and doesn't "think there will be extensive litigation on a long-term basis". At Employment Blawg, George Lenard and Karen Tofte have a three-part series on the likely impact of the law: first, second, third.

WSJ on jury service reforms

Yesterday's article by Nathan Koppel in the WSJ examined the trend in many states toward casting a wider and more representative net for jury service, by for example reducing the number of occupational exemptions. Although I've heard anecdotally from lawyers in a number of localities who felt defendants got a better shake after middle-class exemptions were narrowed, Koppel is not satisfied that there is any systematic showing of such an effect.

The most debatable assertion in the piece is that even if a representative group of potential panel members shows up, "little can be done to police the jury selection process" by which lawyers, judges and jurors themselves skew the actual picking. On the contrary, lots and lots can be done, as witness the very wide disparities between localities in the rules governing jury selection and the strictness with which judges police those rules, and the significant overhauls in jury selection that have taken place in recent years in places as disparate as England and New York City (in both cases much for the better, as I've heard).

Around the web, September 18

  • Some NYC plaintiffs' lawyers aghast after Judge Jack Weinstein slashes ferry-crash contingency fee from $6 million to $3.6 million, noting undoubted liability in case and client's inability to dicker [NYLJ] For a sampling of Lester Brickman's work urging judges to review reasonableness of contingency fees charged to unsophisticated clients, start here, here, here, and, for some empirical background, here and here;
  • Tulane Law School dean apologizes over law review article correlating Louisiana Supreme Court decisions to campaign donations (but was it wrong?) [Times-Picayune]
  • Latest in Adam Liptak's "American Exceptionalism" series looks at increasing disinclination of foreign courts to cite/follow our Supreme Court, and debate over citation of foreign law in ours [NYTimes, Paulsen @ Balkinization] A different view: Joshua Friedman, CJR.
  • Strange bedfellows? Class-action lawyers suing AIG, Lehman were pulling for the firms' survival so the money would be there [AmLaw Daily]
  • As Rhode Islanders wave goodbye, Motley Rice lead-paint caravan packs up and moves on to other localities [Lisa Rickard, Chamber/Providence Business Journal]
  • More offshore drilling? Well, first you'll have to get past the minefield of lawsuits [WSJ editorial]
  • Questions for U.S. lawyers making Capitol Hill rounds with Ecuadorian "indigenous peoples" clients suing Chevron Texaco [Quin Hillyer, Examiner]

NYC settles major homeless suit

The suit had dragged on through twenty-three years of intensive judicial management of New York City's homeless programs, which are (in no small part due to that management) by far the nation's most expensive. Homeless advocates claimed victory in getting the city to concede their goal of establishing a broad "right to shelter", a legal concept that has generally not been accepted by courts outside New York. The city, meanwhile, expressed satisfaction that it would be allowed to reassert substantial control over the programs' management, and that some key legal vulnerabilities would be scheduled to sunset in 2010. Sewell Chan in the NYT:

Under the settlement, the parties agreed a new case would be filed and, following a class action settlement hearing, all cases against the city and state, as well as the new one, would be dismissed. The city will regain full control and oversight of its family services system, "no longer having to enforce over 40 highly-detailed court orders or spend precious staff time and agency resources complying with or litigating these cases," City Hall said in a statement.

The classic account of the litigation appeared eleven years ago, by Peter Hellman in City Journal, and is very much worth reading today to get a sense of the extraordinary way in which it transferred power over billions of dollars in municipal expenditures from elected officials to the private lawyers suing the city, most prominently in recent years the Legal Aid Society with the assistance of the celebrated law firm of Cravath, Swaine & Moore. More: Heather Mac Donald, City Journal.

SimmonsCooper and Delaware, cont'd

The Madison County, Ill., asbestos and mass-tort firm, known for its ties to Delaware Sen. Joe Biden, also seems to be taking a keen interest in the Delaware governor's race, its candidate being Jack Markell who narrowly won the Democratic primary.

Aneurysm? Sorry, I have to go home

More unintended consequences of the new restrictions on residents' work hours at hospitals:

As an aside, I find it amusing that BI-Deaconess has banished pre-rounding:

Many residents who violated this rule were working late and then coming in as early as 4 a.m. to prepare for early-morning patient conferences, called rounds, with senior doctors.

Johnson said that Beth Israel Deaconess prohibited "pre-rounding" three years ago . . .

How can they possibly enforce this? It's bizarrely stigmatizing dedication to patients.

Earlier here.

Wanting Greenberg back at AIG

The same thought is occurring to many, including the NY Sun and NY Sen. Majority Leader Skelos. Also, a disclosure: Greenberg is a member of the Manhattan Institute's Board of Trustees, so discount as appropriate (earlier). More: Zywicki @ Volokh.

Following the credit crisis

Four blogs that were open in my browser all day yesterday, and probably will be again today: DealBreaker, Calculated Risk, Felix Salmon, and Naked Capitalism. (P.S. Also, NYT DealBook).

The New York Sun's Seth Gitell reports from that conference last weekend organized by Massachusetts School of Law founder and dean Lawrence Velvel in Andover, Mass., seeking to establish a legal framework for the prosecution of Bush administration officials for war crimes "including, if guilt is found, the hangings visited upon top German and Japanese war-criminals in the 1940s." A hot topic at the conference: whether to encourage U.S. military officers to disobey White House (i.e., civilian) orders. The scheduled conference program included presentations by lawprofs from the University of Illinois, University of Houston, Stanford, and the University of Toledo, as well as persons from such groups as the Center for Constitutional Rights and Human Rights USA. The event, originally scheduled for the Massachusetts School of Law campus, was moved to a nearby Andover, Mass. hotel after protests from MSL alums. More here, here, and here.

Revisiting the Chrysler bailout

Was the 1979 federal intervention a success, as is often claimed? A forthcoming book by Barry Ritholtz will likely cast doubt on that thesis.

New Point of Law podcast page

It's here. Highlights so far:

* Our popular series of conversations with Chicago's Richard Epstein, including a newly posted conversation about his new book Supreme Neglect: How to Revive Constitutional Protection for Private Property;

* Lester Brickman on asbestos-suit fraud;

* And MI's Jim Copland on topics that include FDA pre-emption, asbestos, and "light" tobacco litigation.

Check back for more Epstein conversations and other additions in coming months.

AIG minus Hank Greenberg

Eliot Spitzer's vendetta led to the untimely ejection of the world's most admired and respected insurance executive from the worldwide colossus of a company he had built (details here, here, here, here, here, here, and here). Greenberg was replaced by a management team almost universally regarded as unable to fill his shoes. Would AIG be better equipped to ride out this storm -- or perhaps not have landed in it in the first place -- had its mastermind stayed in charge? Larry Ribstein wonders, and many others may be wondering too. More: DealBreaker.

Around the web, September 16

Lexis/Nexis Insurance Law Center

We're one of their recommended sites. For our coverage of insurance law, start here.

Montana Gov. Brian Schweitzer was falling all over himself last week to proclaim "just kidding" after a recording of his July speech to the American Association for Justice circulated on the web. In remarks at the AAJ's annual conference in Philadephia (following Al Franken), the Democratic governor entertained the lawyer crowd with stories of tribal police threatening Republican poll watchers with arrest to drive them off the reservations during the 2006 Senate elections. Schweitzer also chortled about how he called up the county clerk for Butte/Silver Bow and got her to hold off releasing the election results until he had announced Jon Tester's victory over the incumbent Republican, Sen. Conrad Burns.

You can get a sense of the scandalette from the news headlines:

A dicey proposition for any elected official from a rural state, going to the big city and making fun of your constituents. Corruption in Montana, ho, ho. You might also wonder what Schweitzer was doing in Philadelphia in the first place. The nation's leading trial lawyers group is interested in a governor from Montana?

Oh, yes. As a matter of fact, trial lawyers/lobbyists represent the largest source of contributions to his campaign. And Schweitzer was introduced with this warm tribute:

Gov. Schweitzer wants to be introduced as a farmer, rancher and a snake charmer. I'm not sure whether he was a snake charmer or he simply beheaded the snake, because when he became Governor of Montana, he took care of tort reform in Montana. He passed legislation, signed legislation, prohibit secrecy agreements, and he rolled back the so-called tort reform that had passed in Montana. He also has been a great friend of the victims of asbestos and stood up for the victims in Libby, Montana, and really helped change the debate with regard to asbestos.

You can listen to the introduction and the entire speech by clicking here and choosing one of the options.

And who is that doing the introduction? Obviously it's an AAJ eminence, but we couldn't find the attribution online. If you know, drop me a line at cwood -at- nam.org.

Rangel ethical tangle

AIG and ratings agencies

Some interesting discussion in the comments at Naked Capitalism, including the possible role of the litigation climate in swinging the ratings agencies from too-indulgent to merciless. P.S. Also depressing: WaMu & FDIC. When will it be okay to start breathing again post-Lehman? (Salmon).

We've discussed Lester Brickman's important work on rampant fraud and misdiagnosis in asbestos, silicosis and fen-phen mass screenings, and now the Cardozo lawprof is out with an SSRN paper entitled "The Use of Litigation Screenings in Mass Torts: A Formula for Fraud?" with some sobering estimates of the scope of the problem. Abstract:

Lawyers obtain the "mass" for some mass tort litigations by conducting screenings to sign-up potential litigants en masse. These "litigation screenings" have no intended medical benefit. Screenings are mostly held in motels, shopping center parking lots, local union offices and lawyers' offices. There, an occupational history is taken by persons with no medical training, a doctor may do a cursory physical exam, and medical technicians administer tests, including X-rays, pulmonary function tests, echocardiograms and blood tests. The sole purpose of screenings is to generate "medical" evidence of the existence of an injury to be attributed to exposure to or ingestion of defendants' products. Usually a handful of doctors ("litigation doctors") provide the vast majority of the thousands and tens of thousands of medical reports prepared for that litigation.

By my count, approximately 1,500,000 potential litigants have been screened in the asbestos, silica, fen-phen (diet drugs), silicone breast implant, and welding fume litigations. Litigation doctors found that approximately 1,000,000 of those screened had the requisite condition that could qualify for compensation, such as asbestosis, silicosis, moderate mitral or mild aortic value regurgitation or a neurological disorder. I further estimate that lawyers have spent at least $500 million and as much as $1 billion to conduct these litigation screenings, paying litigation doctors and screening companies well in excess of $250 million, and obtaining contingency fees well in excess of $13 billion.

On the basis of the evidence I review in this article, I conclude that approximately 900,000 of the 1,000,000 claims generated were based on "diagnoses" of the type that U.S. District Court Judge Janis Jack, in the silica MDL, found were "manufactured for money."

Antitrust onslaught against Google?

Around the web, September 14

All-blog edition:

From the Senate Judiciary Committee, an announcement of a hearing Tuesday morning by the Subcommittee Constitution, Civil Rights and Property Rights, "Restoring the Rule of Law." Tendentiously framed, don't you think?

Chairman Russell Feingold (D-WI) issued a news release on the hearing. Excerpt:

[The] Subcommittee will hear testimony from legal and historical experts on what steps the next president and the next Congress must take to repair the damage done by the Bush Administration to the rule of law. The hearing is an effort to provide the next president with a full range of recommendations for reestablishing appropriate checks and balances in a variety of areas, including warrantless wiretapping, interrogation standards, detention policy, abuse of executive privilege, excessive government secrecy, violations of privacy and misleading Congress.

In addition to the testimony of the witnesses at the hearing, Senator Feingold has solicited responses from a host of other law professors, historians, advocates and other experts to offer a blueprint to the next president and Congress for what must be done, starting in January 2009, to reverse the previous administration's abuses. Read the written testimony here.

Voluminous materials.

U.S. District Judge Thomas Porteous, of New Orleans, has been suspended for two years by the Fifth Circuit, the most serious discipline of a federal judge by his peers of which I am aware. The Wall St. Journal's Law Blog has the details.

Porteous appears to be a disgrace. He apparently incurred substantial gambling debts, then in 2001 filed for bankruptcy, but under a fictitious name, so as to save himself embarrassment. The judge was warned not to incur more debt while in bankruptcy, the report stated, but he still ran up thousands of additional dollars in undisclosed gambling debt at casinos in Louisiana and Mississippi.

The Judicial Conference also concluded that Porteous solicited and received gifts from lawyers who appeared before him, including, "cash payments, numerous lunches, payments for travel, meals, and hotel rooms in Las Vegas." The judge failed to disclose the gifts, according to the report, and used methods of payment that left no paper trail, including once dispatching his secretary to pick up an envelope of cash.

"There's no prohibition in law or practice, which prevents judges from socializing with their friends," said Lewis Unglesby, Porteous' lawyer. "Big deal. I pay today; you pay tomorrow." Um, I've never dispatched my secretary to get envelopes of cash from my students, Mr. Unglesby.

Challenging the lobbying disclosure law

Quentin Riegel, the National Association of Manufacturers' vice president for litigation and deputy general counsel, attended the oral arguments before the Circuit Court of Appeals, D.C., Circuit, this morning in NAM v. Taylor, the association's challenge to the "affiliated organizations" provision of the Honest Leadership and Open Government Act of 2007. His account of the argument is here: From the Arguments in NAM v. Taylor, the Lobbying Lawsuit

For more history and documents on the litigation, a First Amendment case, go here.

Politics of elite law firms

No, not quite as lopsided as the politics of elite law schools, but still plenty lopsided, as Bruce Batista (via Jonathan Adler) notes: "among the nations 25 largest law firms -- popularly believed to be havens for fat-cat corporate lobbyists and redoubts of greedy Republicanism -- Obama has out collected McCain by a more than 3-to-1 margin: $2.595 million to $807,000."

City juries and suburban juries

A new study (of criminal trials in the Baltimore area) tends to confirm the widespread surmise that they dispense different brands of justice.

Doing well at institutional reform litigation: per Law.com's Fulton County Daily Report, the Eleventh Circuit "has upheld more than $10.5 million in fees for lawyers who successfully challenged Georgia's foster care system -- but not before the judge who wrote the main opinion suggested that the lawyers were being greedy." Judge Edward E. Carnes wrote that the attorneys filing the suit, led by State Bar of Georgia President Jeffrey Bramlett of Bondurant, Mixson & Elmore and Marcia Robinson Lowry of Children's Rights Inc., "want a lot more money than they would receive from multiplying the number of hours they worked on this case by the hourly rate they charge." Lowry's group, which has been involved in lawsuits against many other states' foster care systems, faced intense criticism for the millions in fees it siphoned off from New York City in its longstanding litigation against the city's foster care operations.

Update: Oregon Health & Science University

As sequel to a peremptory fiat by the state's supreme court, a compromise on liability limits for Portland's teaching hospital is struck between the demands of the state's trial lawyers and the wishes of the actual elected representatives of Oregon voters.

Of all the anti-arbitration bills in Congress this year, long considered the most likely to pass is the one to vitiate pre-dispute abritration clauses in nursing home contracts -- the appeal to emotion is stronger. Once you get the legislative precedent, the future bills will move more easily.

So it's no surprise that today the Senate Judiciary Committee voted out S.2838, the Fairness in Nursing Home Arbitration Act (introduced by Sen. Mel Martinez, the Florida Republican and trial lawyer).

The American Association of Justice hailed the bill's progress in a release, quoting AAJ President Les Weisbrod: "The practice of mandatory arbitration in nursing home contracts is one that preys on vulnerable seniors and their families when they are making tough decisions about long-term care. It is a system deliberately designed to take advantage of the weakest members of our society in order to pad the profits of greedy nursing home corporations."

The American Health Care Association issued a release criticizing the legislation, citing a "diverse coalition of senior, caregiver and taxpayer advocacy groups." Bruce Yarwood, President and CEO of the AHCA said: "This new legislation ostensibly helping seniors has drawn an unusually diverse, broad cross section of opposition because it not only undermines seniors' care needs, it restricts consumers' ability to exercise free choice." Lisa Rickard of the Chamber's Institute for Legal Reform gets her say, as well.

This could become one of the trial lawyers' real successes this session, helping to return to past practices the kept disputes in the courts, lengthy and expensive.

UPDATE: Oh yes. The House Judiciary Committee voted out the companion bill, H.R. 6126, 17-10 on July 30th. And for previous posts on the subject of anti-arbitration legislation, go here.

Tax compliance is hard. Who knew?

Nice Pants, Bad Suit

Walter has taken note at Overlawyered.com of former D.C. Administrative Judge Roy Pearson's appeal of his lawsuit against his drycleaners, the Chungs, for misplaced suitpants. Arguments are set for October 22 in the D.C. Court of Appeals. (See this Shopfloor.org post for more.)

Out of idle curiosity we went to the (often-balky) website for the D.C. Superior Court and called up the docket from Pearson v. Chung. Amazing. 15 pages worth, ranging from June 6, 2005 to June 25, 2007. Take a look.

UPDATE: Worth noting the consequences of Pearson's suit against the Chungs as posted at the website of their attorney, Chris Manning: "Sadly, the Chungs were forced to close Custom Cleaners in September 2007 due to the emotional toll and flagging revenues which resulted from Mr. Pearson's lawsuit. The Chungs now operate only one small pick-up dry cleaning store called Happy Cleaners located at 1119 7th Street, NW in Washington, DC."

Politics of elite lawprofs

Paul Caron of TaxProfBlog has run the numbers on this year's Presidential contributions (at least those coded "law professor", which may miss some) and they're even more overwhelmingly lopsided than you might have expected: 95 percent Obama, 5 percent McCain. At Harvard, Stanford, Berkeley, Texas, Michigan, Penn, and -- despite its no-longer-accurate reputation -- Chicago, there were no Republican contributors at all. The only GOP-leaning exception in Caron's list of top schools: Northwestern. Discussion: Bainbridge, Zywicki @ Volokh, and, wonderfully self-confirmingly, Markel @ Prawfsblawg (who's up for the Larry Tribe Obama fundraiser?).

New motto: America's law schools, where Republicanism is a rounding error.

"Fairness" vs. "What's in the Constitution"

Some disturbing poll numbers on public views of the Supreme Court's role (more).

Plaintiffs dismiss Scruggs' McIntosh case

David Rossmiller has the details on the whimper-like demise of what was once billed as a key Rigsby-backed Gulf Coast insurance case. It's worth bookmarking in case you ever run into someone who says, "You know, it's a shame Dickie Scruggs blew it all with the judge-bribing, because his Katrina wind/water cases really had a lot of merit."

Around the web, September 11

  • "Eight counties in New York State have no obstetricians: Essex, Greene, Seneca, Tioga, Washington, Yates, Schoharie, and Hamilton" [Barringer/Berkowitz, NY Sun via Common Good; more]
  • Card check proposal to dispense with union secret ballot might just be the most important domestic issue at stake in November's election [Rubin, Pajamas Media]
  • "A look at [AG and gubernatorial candidate Jay] Nixon's big-money donors starts and ends with Missouri's big-name lawyers, specifically personal injury attorneys." [St. Louis Post-Dispatch]
  • "Market doesn't work for EULAs". But in the case of Google Chrome maybe it did [Szoka, TechLiberation]
  • Early bird registration about to expire on U.S. Chamber's Legal Reform Summit, set for Oct. 29 in Washington [more]
  • Self-regulation effort by third-party litigation funders in the U.K. [Legal Week]
  • Short on cash? Earn money by blogging for trial lawyer causes [Tort Deform]
Fannie-Freddie fuddle

When "Government-Sponsored Enterprises" fail, blame free-market thinking. Yes, that makes lots of sense.

Our newest featured column is a reprint of a post I did over the summer contrasting the boomlet of alarm over potential favoritism and fee excesses in Justice-Department-directed "corporate monitor" work with the general lack of alarm, in some of the same quarters, over the awarding of government litigation work to outside contingency-fee counsel.

New Jersey's relatively pro-plaintiff tort laws have long played an influential role nationwide, especially in product liability, but for the past decade there have been very few efforts in Trenton to reconsider them. That's changing now, with the formation of a business-backed group called the New Jersey Lawsuit Reform Alliance. The Star-Ledger's Kate Coscarelli has an interview with Marcus Rayner, executive director of the NJLRA, as well as his opposite number from ATLA-NJ.

Update: Gourdine v. Crews

In a closely watched case (see Jun. 30), Maryland's highest court declined to create a new duty of drugmakers toward third parties who might be injured by persons who take their drugs. The case arose after a diabetic driver who had been prescribed an Eli Lilly insulin product suffered an adverse reaction and ran into the vehicle of a prominent Prince George's County, Md. politician, killing him. The case raised several other issues of which one was pre-emption, as Beck and Herrmann explain. (Examiner; decision, PDF courtesy NAM).

In other discovery news

Always wanted to write that...

Anyway, as anticipated and following up on the legislation mentioned immediately below, there's a new report out on the costs and time involved in litigation due to e-discovery. From the ABA Journal:

Updated: The civil justice system in the United States is so bogged down in a "morass" of e-discovery that it is often too expensive for litigants to take their cases to trial, according to a survey of trial lawyers.

Now the next step is to fix this increasingly dysfunctional system, according to a press release about an interim report (PDF) on the survey, which is a joint project of the American College of Trial Lawyers and the Institute for the Advancement of the American Legal System (IAALS).

The U.S. House of Representatives did indeed pass S. 2450 yesterday on a voice vote, "A bill to amend the Federal Rules of Evidence to address the waiver of the attorney-client privilege and the work product doctrine. (Earlier post.)

In the brief floor discussion, Rep. Shiela Jackson-Lee (D-TX) and Rep. Steve King (R-IA) explained that the legislation was prompted by the Judicial Conference, responding to the rising costs of discovery as parties seek to prevent inadvertent disclosure of privileged information. King's quick summary:

[The] cost of discovery has spiked in recent years based on the proliferation of e-mail and other forms of electronic recordkeeping. Litigants must constantly sift through a mountain of documents to ensure that privileged material is not inadvertently released. While most documents produced during discovery have little value, attorneys must still conduct exhaustive reviews to prevent disclosures. The cost to litigants is staggering and the time consumed by courts to supervise these activities is excessive.

The system is broken and must be fixed. S. 2450 does just that by providing a predictable standard to govern waivers of privileged information. The legislation improves the efficiency and the discovery process, while it still promotes accountability. It alters neither Federal nor State law on whether the attorney-client privilege or the work product doctrine protects specific information. The bill only modifies the consequences of an inadvertent disclosure once a privilege exists.

Here's an interview on the legislation, with Judge Lee H. Rosenthal, U.S. District Court for the Southern District of Texas, and chair of the Judicial Conference Committee on Rules of Practice and Procedure.

The bill now goes to President Bush for his signature.

Michigan Chief Justice Clifford Taylor

He's interviewed on video at American Justice Partnership on public understanding of the rule of law, Little League and "legal land mine areas", judicial activism, lawyers as a special interest rather than a "guardian class", and more. The highly praised majority of the Michigan court is a perennial target of the organized plaintiff's bar and its allies, and Justice Taylor's own seat is up this November.

A Philadelphia federal court has issued a decision that, in contrast to much recent jurisprudence, resolved FDA pre-emption issues favorably to tort plaintiffs. Beck and Herrmann sort out the significance.

The case was one blaming the antidepressant Paxil for a teenager's suicide, and a report last week (summarized in the Washington Post) raises further questions of whether the panic a few years ago based on claims of such a link may have done more harm than good:

Suicides among U.S. children appear to be on the rise after a 15-year decline, and the trend may owe, in part, to fewer teens being prescribed antidepressants, a new study suggests. ...

One possible explanation for the increase could be that antidepressant use among children has been the subject of intense controversy in recent years, making doctors and parents more reluctant to use them.

Those familiar with asbestos billionaire Peter Angelos know that he has recycled millions of his dollars as he ground a very proud baseball franchise into the dust. But the Angelos law firm has long sought a new pot of gold to replace asbestos, and thought it found it in the cell phone industry. The Angelos' claim (termed "junk science" by many) is in essence that holding a cell phone close to one's head is bad for the brain. The firm struck out swinging in its home state of Maryland, and last week bit the dust in a mammoth class action law suit in Pennsylvania (summary on Law 360).

Judge John R. Padova of the U.S. District Court for the Eastern District of Pennsylvania dismissed Angelos' putative class action, which charged that cellular phone manufacturers formed a conspiracy to market cell phones while suppressing knowledge of the adverse biological effects and health risks allegedly posed by radio frequency emissions.

In what may be a prelude to the forthcoming Wyeth case before the Supremes, Judge Padova accepted the defendants' pre-emption claims. He ruled that in order for Mr. Angelos' clients to win a jury verdict on his claims that defendants knew or should have known of the biological risks associated with cell phone use and the associated RF exposure, jurors would have to accept his premise that the FCC's maximum standard for RF exposure is inadequate to ensure the safe use of cell phones.

The Angelos firm may have to find its pot of gold elsewhere...

The Michigan Supreme Court today rejected the appeal by the labor-packed, partisan Reform Michigan Government Now, refusing to put on the ballot the proposed state constitutional amendment to revamp all three branches of government. Detroit Free Press story:

The high-court majority -- Chief Justice Clifford Taylor and Justices Michael Cavanagh, Maura Corrigan, Stephen Markman, Elizabeth Weaver and Robert Young Jr. -- said the Reform Michigan Government Now proposal to enact three dozen constitutional changes, including pay cuts for elected officials, reductions in the size of the Legislature and appellate judiciary, and changes in redistricting rules, was too broad to be addressed by the amendment process and could not be adequately explained on the ballot in 100 words as required.

Justice Marilyn Kelly dissented, suggesting the court was leaving open to question the standards for future proposed amendments.

The AP story is here, and the Detroit News is here, with lots more detail. The initiated measure was the brainchild of some Democrats and organized labor, attempting to seize control of government in time for post-Census redistricting. (In reducing the size of the Supreme Court and appellate court, Republican appointees would have been booted.) They kept their backing silent or disguised until the Mackinac Center found a Powerpoint presentation that laid out the whole strategy.

Earlier posts here.

PBDE Liability: Get ready

This concise Law 360 report has likely already pushed all the right buttons at various class action firms. The culprit: a chemical with known benefits that is no longer produced in its riskiest formulations, and whose real risk is in fact currently unknown.

A study released by the Environmental Working Group found that polybrominated diphenyl ethers, or PBDEs, a class of chemicals used in fire retardants, is appearing in toddlers' blood at levels three times higher than in their mothers'.

Historically, three types of PBDE were used in consumer products: Penta-BDE, Octa-BDE, and Deca-BDE. Each type of PBDE has different properties and uses. The manufacturers of Penta-BDE and Octa-BDE voluntarily stopped production at the end of 2004. when risk of those much more potent formulations started to be known. Consequently, Deca-BDE is the only PBDE flame retardant currently used in manufacturing. Deca, much less potent than the other two formats, was found in relatively low levels in children in the EWG study. The study found a low average concentration of Deca PBDE's (the only brand currently produced) of 4.7 parts per billion in children, whereas it found more than 5 times that concentration of total PBDEs -- including those no longer being manufactured -- in children.

Children ingest more PBDEs than adults because the chemicals stick to hands or toys, which toddlers tend to put in their mouths. Children similarly ingest lead-based paint, when their parents fail to maintain their premises or to clean up regularly.

"Flame retardants save actual human lives, and no illness, ailment, or harm to any human anywhere has ever been reported as a result of exposure to Deca, even among those who work producing the material," said a spokesman for The Bromine Science and Environmental Forum. Wanna bet this will not stop suits against makers of Deca PBDE's? We have learned from the asbestos debacle that the "state of the art defense" was no barrier to Bleak House style litigation.

Buckle up, here we go! Thinking of using a new and potentially beneficial chemical compound? Get that crystal ball out first!

Politico's The Crypt blog publishes the e-mail from the Senate Democratic Caucus on the issues leadership intends to address before adjourning (one target date is September 26). Energy figures prominently, and the entire list is shaped by electoral politics, of course.

Those issues with the most direct effect on business-related litigation (save for judge confirmations), priorities as identified by the Senate Majority Leader:  

  • Americans with Disabilities Restoration Act: Business groups like my employer, the National Association of Manufacturers, have reached a modus vivendi with disability advocates and accept the legal burdens represented by the legislation. The Heritage Foundation is much more critical, although it finds the Senate version, S. 3406, far preferable for business than the version that passed the House, H.R. 3195.
  • Equal pay legislation, i.e., the Ledbetter legislation, which would eliminate statutes of limitation in employment discrimination suits and wreak other legal mischief. The Senate failed to envoke cloture on H.R. 2831 in April, and another run at the bill would remind voters of Sen. Obama's support and Sen. McCain's opposition. For previous posts on the subject, go here.
  • Federal media shield, i.e., the Free Flow of Information Act. Senator Reid pushed S. 2035 to a cloture vote right before the August recess but Republicans blocked consideration to increase pressure for a vote on energy legislation. The major media continue to lobby for the federal media shield (c.g. this L.A. Times editorial and this Atlanta Journal-Constitution op-ed from the head of the Society of Professional Journalists, "Shield law needed, not for press, but for democracy"), so Senate action can be seen as an effort to shore up the base.

And that appears to be it, although it wouldn't be surprising to see an anti-binding-arbitration measure slip through someplace.

UPDATE (3 p.m.): Now that we look at it again, Politico's speculation notwithstanding, it's possible that Sen. Reid's e-mail referred to the Paycheck Fairness Act, H.R. 1338, which passed the House on August 1. Among other things, it would lift the cap on punitive damages for suits filed under the Equal Pay Act. Daniel Schwartz recently wrote about the legislation at Overlawyered.com.

Around the web, September 8

  • Citing pre-emption, court throws out suit over nondisclosure of supposed cellphone-cancer link, big win for telecom defendants [Legal Intelligencer]
  • Lawyers invite themselves into another new area: ABA House of Delegates endorses doing away with Feres barrier to med mal suits against military docs [ABA Journal]
  • Folly of cities' efforts to use public nuisance law against subprime mortgage players [Faulk, Gray, Larson for WLF; more here and here]
  • Guilty plea in non-law-related scandal marks downfall of Madison County's Thomas Lakin, once a leading class action lawyer [St. Louis Post-Dispatch]
  • Juror's-eye view of a Bronx whiplash trial [Inner City Press, scroll to Jul. 21]
  • Don't forget AEI's upcoming conference on the future of federalism with many familiar names [in D.C. on Friday]

On the House suspension calendar Monday, September 8, is S. 2450, a bill to amend the Federal Rules of Evidence with respect to the disclosure of a communication or information covered by the attorney-client privilege and work product protection.

Introduced by Sens. Leahy and Specter, the bill is intended to ease the rising costs and time expended on discovery as parties attempt to prevent inadvertent disclosure of privileged documents. The Senate Judiciary committee report explains both the rationale and approach in the bill:

The bill provides a new Federal Rule of Evidence 502 to limit the consequences of inadvertent disclosure, thereby relieving litigants of the burden that a single mistake during the discovery process can cost them the protection of a privilege. It provides that if there is a waiver of privilege, it applies only to the specific information disclosed and not the broader subject matter unless the holder has intentionally used the privileged information in a misleading fashion. An inadvertent disclosure of privileged information does not constitute a waiver as long as the holder took reasonable steps to prevent disclosure and acted promptly to retrieve the mistakenly disclosed information.

The bill provides a new rule to ensure that parties will take advantage of its protections by remaining enforceable in subsequent proceedings. If a federal court enters an order finding that an inadvertent disclosure of privileged information does not constitute a waiver, that order will be enforceable against persons in federal or state proceedings. This protects the rule's ability to limit discovery costs by ensuring that parties in any given case will know they can rely on the new waiver rules in subsequent proceedings.

The bill passed the Senate on a voice vote in February, has not been amended, and its presence on the suspension calendar means almost certain House passage -- then on to the President for his signature.

The Yale/NYU lawprof has published Tort Reform, Kiwi-Style on SSRN (via Robinette, TortsProf). Abstract:

American legal scholars and social scientists have long been intrigued by New Zealand's accident compensation system, which essentially abolished common law tort almost 40 years ago. This paper, prepared for a conference sponsored by the Brookings Institution and Common Good, provides an up-to-date account of the New Zealand system, with a focus on its treatment of two types of claims - for medical injuries and emotional distress - that raise particularly vexing boundary problems for the system. It then discusses a number of lessons that U.S. policymakers and scholars can draw from the New Zealand experience.

Russia vs. Bank of New York Mellon, cont'd

Odd doings continue in the $22.5 billion lawsuit, per Bloomberg:

``Every legal system has its flaws,'' [plaintiff's expert and Harvard lawprof Alan Dershowitz] said in an interview yesterday. ``Who are we to cast aspersions on a country's legal system?''... Leading the Russian legal team is 47-year-old Steven C. Marks, an attorney with Miami-based Podhurst Orseck P.A. who has worked with the Russian government for the past decade on cases including tobacco litigation.

His firm pitched the money-laundering case against BNY Mellon to Russian authorities. It has hosted conference calls to promote the merits of Russia's claims and issued a press release when Bove wrote in March that U.S. and European Union courts may enforce any ruling made in Russia.

Marks has declined to disclose the percentage of the judgment his firm stands to collect as fees if it wins the lawsuit, drawing criticism from analysts at JPMorgan Chase & Co. in New York.

A team led by Vivek Juneja wrote in a July 16 note to clients that ``misstatements,'' inconsistencies and lack of disclosure about fee arrangements by the trial attorneys were troubling.

``We would hope legal authorities and agencies would look into what is really going on in this lawsuit,'' the JPMorgan analysts wrote.

Marks said any criticism of his or Russia's motives is ``inappropriate.''

``The analysts have a financial interest in this institution,'' Marks said in an interview.

Earlier here, here, here, and here.

McGraw and the Oxycontin saga

The U.S. Chamber-backed West Virginia Record critically summarizes the tortuous course of the state's lawsuit against Oxycontin maker Purdue Pharma, often raised by critics as symbolic of their objections to Attorney General Darrell McGraw's handling of his office. More here, here, here, and here. More: Pero, American Courthouse.

Philadelphia obstetrics crisis, cont'd

Now Chestnut Hill Hospital is closing its 1,000-babies-a-year maternity unit (via Pero). More background here.

No measles vaccine-autism link

Around the web, September 5

  • Nebraska Attorney General Jon Bruning, president-elect of NAAG, says he's not sure he's ever hired outside counsel on contingency and says colleagues should be "very, very careful" of doing so [Legal NewsLine]
  • More Bruning, discussing absence in Nebraska civil law of punitive damages as conventionally known elsewhere [same]
  • FDA's coil of conflict-of-interest rules are a good way to starve the agency of qualified outside advice [Henderson/Hooper, MI's Medical Progress Today]
  • Appropriations? Must be a job for judges: court-appointed receiver asks judge to seize $8 billion from California treasury for prison health programs [NY Times]
  • Premise of $11 million Philly verdict: ER docs should have ordered a CAT scan on 20-year-old woman complaining of headaches and numbness, then they'd have caught her rare brain cancer [Philadelphia Inquirer]
  • Oh, great, another call to sic trial lawyers on National Labor Relations Act infractions (but not the ones committed by unions) [Sirota, SF Chronicle]

"Putting a stop to tort windfalls"

Australia: call for cerebral-palsy fund

Law and medicine Prof. David Studdert of Melbourne University has called for an administered compensation scheme as less chancy and inefficient than malpractice lawsuits seeking to pin blame on obstetricians for the condition. "Some [doctors] see cerebral palsy litigation as a sign of how hopelessly out of touch the courts are with sound science.... Cerebral palsy cases stretch negligence law beyond its limits." Studdert's recent lecture was entitled "Bad babies: Law, Medicine and the battle over neurological birth injury" [University press release, Melbourne Age].

"This is definitely not a good book"

Not to pile on the egregious Kevin Phillips -- well, OK, maybe a little -- the distinguished liberal economist Robert Solow takes him apart in the New Republic this issue.

Issue preclusion in mass torts

Byron Stier of Southwestern has a new paper (via Robinette) on a source of asymmetric injustice aimed at defendants in mass torts, though it must be said the alternative of frankly inviting inconsistent verdicts does not inspire confidence either. Abstract:

If there are no prior inconsistent verdicts, non-mutual offensive issue preclusion generally allows a finding by a single jury to bar relitigation, in future cases, of the issue by the defendant who lost in the prior case. This approach, however, ignores the possibility that the first verdict delivered may have been an outlier if further verdicts were permitted to be delivered. In mass tort litigation, such a flawed approach may result in critical issues such as defect or negligence being resolved by only six jurors, whose potentially outlier verdict is then applied to resolve the cases of thousands, perhaps bankrupting a company or an industry when most juries would not so hold. Focusing on mass tort litigation, this article presents the growing empirical evidence of verdict variability and then critiques the use of issue preclusion, whose downside is applied only against defendants, not plaintiffs, because only defendants were parties to the prior action. As a result, the article argues that courts should exercise their discretion to deny issue preclusion in mass tort litigation. Instead, courts should join the emerging consensus of mass tort management that ultimately better serves the goals of efficiency and public respect supposedly underlying issue preclusion: allow multiple verdicts to unfold a more balanced view of liability that will frequently be used for well-informed and far-reaching settlements.

In-house lawyers as stoolpigeons

In the continual expansion of "whistleblower" law, old ideas of lawyer-client confidentiality go by the wayside as company lawyers are awarded new legal incentives to use their privileged access to internal communications to rat out their employers. C. Evan Stewart of Zuckerman Spaeder explains in the NYLJ.

The Michigan Supreme Court this morning will be hearing the appeal from Reform Michigan Government Now!, the labor-backed partisan group that has sought to put a constitutional amendment on the November ballot that would revamp all three branches of state government. (AP story.) The Court of Appeals threw the measure out because the 19,000-word proposal amounted to a wholesale revision of the state Constitution, which requires a constitutional convention.

Proponents -- who sought to hide their labor connections -- want to control government in time for the next post-census redistricting. Among the ballot measure's effects is the removal of Republican-appointed judges from the Supreme and appellate courts.

The Supreme Court's order approving immediate appeal is here.

Earlier posts:

On and off the ballot in Michigan
Michigan court depacking scheme off the ballot, for now
More on the Michigan scheme
The story behind "Reform Michigan Government Now!"

UPDATE: The Detroit News covered the arguments.

From Washington Legal Foundation by defense-side lawyers Thomas R. Bender, Richard O. Faulk, John S. Gray:

On July 1, 2008, the Supreme Court of the nation's smallest state, Rhode Island, gave a loud and mighty roar as it rejected the use of public nuisance law as a means to sue manufacturers of lawful products. In so ruling, the Court conforms to the traditional role of judges presiding over common law controversies, and joined a growing list of other state supreme courts that have refused to enlarge the boundaries of this ancient tort.

Among fatal objections to the plaintiffs' theory: "Defendants Must Control the Public Nuisance at the Time of the Injury" and "Harm Occurring in a Private Homes is not a 'Public Right' that Triggers Public Nuisance Liability". Full 18-page paper here (PDF).

Around the web, September 3

Unconscionability in Washington state

According to the Supreme Court of the Evergreen State (McKee v. AT&T, PDF)(via), it's unconscionable to use consumer contract language to specify binding arbitration in such a way as to vary from the state's prescribed class action rules, statute of limitations, restrictions on confidentiality, or availability of attorneys' fees. So it voided the relevant language in an AT&T consumer contract. To get to that point, it also voided a clause providing that the contract would be governed by New York law.

You still sometimes hear people describe the doctrine of unconscionability as if it banned mostly the sorts of contract clauses that no consumer would have entered knowingly or that no legislature would have prescribed as a reasonable balancing of the two sides' interests. In Washington, at least, the doctrine appears closer to serving as an all-purpose wrench with which the court pries off language in consumer contracts that vary from what it deems good public policy.

Shareholder class actions in Australia

With the assistance of litigation funding company IMF, a record-setting settlement was just obtained from a defendant firm named Aristocrat over misleading reports of sales of gambling machines. But Australian Shareholders' Association chief executive Stuart Wilson details the loser-pays difference:

There are two main reasons why we will not follow the US's lead in relation to frivolous shareholder actions. The first is that in Australia, costs can be awarded against the plaintiff, and are paid by the funder. In addition, IMF is highly conservative in its assessment of what prospective cases will cost, whether shareholders will win, and the amount of any settlement or judgment. With the risk of having to pay costs, only the strongest cases are considered.

Spitzer vs. Grasso, a post-mortem

Why the former AG may have thought his case against the NYSE chief was strong enough to go ahead, and why he proceeded to fall flat on his face (Joseph E. Bachelder III, Harvard Law School Corporate Governance Blog via Bainbridge).

Guestblogger thanks

Many thanks to Jane Genova for her posts over the past week. Be sure to check out her work at Law and More as well as at her speechwriting-ghostwriting site.

The Manhattan Institute, which maintains this site, has a growing library of videos on YouTube (57 at latest count) on "taxes, welfare, crime, the legal system, urban life, race, education, and many other topics", featuring such compelling public intellectuals as James Q. Wilson, John McWhorter and Heather Mac Donald.
In the linked news clip from Canadian TV, the Institute's Jim Copland discusses lawsuits against schools. The Institute also has an audio archive (iTunes or other program needed to play) with extensive podcast resources. Check them out today!



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.